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ED must pay 1L cost for turning civil dispute to criminal case: HC

Staff Selection Commission

Mumbai: The Bombay High Court imposed an an exemplary cost of Rs 1 lakh on the Enforcement Directorate (ED) for abusing the process of law, converting a civil dispute between two parties into a criminal case, and invoking money laundering charges. The court said the ED acted in a mala fide manner and levied an equal fine on the complainant in the case.

The court said, “There is no element of cheating alleged either by the complainant or by ED. If cheating is not involved, then no proceeds of crime or any criminal activity are detected in the present case.”

HC allowed ED a four-week period to challenge the decision in the Supreme Court.

The complainant, Gul Achhra, purchased commercial premises in Ashok Conclave in Malad (West) from Rakesh Jain of Kamala Developers in 2007 to set up a residential hotel. He also entered into another agreement with Sadguru Enterprises to create amenities for the hotel and paid Rs 4.27 crore. The HC order mentioned that there was a delay in obtaining an occupation certificate from the BMC because of some alterations made in violation of the sanctioned plan. Sadguru acknowledged some pending works in writing.

HC said there is nothing that prohibits a developer from entering into a sale agreement and allowing execution of a simultaneous agreement for providing additional amenities in the same premises through another agreement.

Achhra, referring to the payment made to Sadguru, alleged that Jain purchased two flats in another building and a garage from this tainted money or ‘proceeds of crime’.

A mere breach of promise, agreement or contract does not ipso facto constitute an offence of criminal breach of trust, HC said.

Gul Achhra’s two complaints with the Economic Offences Wing and Malad police were not taken up as they said it was a civil dispute. He then approached Andheri magistrate court which directed Vile Parle police to investigate the case. Vile Parle police lodged an FIR and subsequently filed a chargesheet. HC noted that Gul Achhra suppressed the earlier findings of EOW and Malad police and wanted the case to be registered at Vile Parle. A series of legal fights on several counts subsequently ensued.

In its order on Tuesday, HC said, “It is seen that no element of cheating is involved. The complainant has clearly sought to convert a clear civil dispute between parties about a mutual written contract into a criminal case. The complainant was not deprived of his property. He received his property along with additional amenities under the agreements, hence invoking a criminal case is a sheer abuse of the due process of law and the legal system.” HC said, “ED has conducted itself in a mala fide manner when the various agreements and correspondence between the parties spell out their inter se rights. ED for reasons best known to it have supported the complainant’s false case without application of mind or without going through the record… this is a fit case for imposition of exemplary costs on the complainant and ED for invoking criminal action in the present facts and harassing the developer with criminal action.”

 

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